Correlation Between JYP Entertainment and Korea New

Can any of the company-specific risk be diversified away by investing in both JYP Entertainment and Korea New at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining JYP Entertainment and Korea New into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JYP Entertainment and Korea New Network, you can compare the effects of market volatilities on JYP Entertainment and Korea New and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in JYP Entertainment with a short position of Korea New. Check out your portfolio center. Please also check ongoing floating volatility patterns of JYP Entertainment and Korea New.

Diversification Opportunities for JYP Entertainment and Korea New

0.06

Correlation Coefficient

JYP Entertainment  Korea New

Significant diversification

The 3 months correlation between JYP and Korea is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding JYP Entertainment and Korea New Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea New Network and JYP Entertainment is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on JYP Entertainment are associated (or correlated) with Korea New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea New Network has no effect on the direction of JYP Entertainment i.e., JYP Entertainment and Korea New go up and down completely randomly.

Pair Corralation between JYP Entertainment and Korea New

Assuming the 90 days trading horizon JYP Entertainment is expected to generate 1.69 times more return on investment than Korea New. However, JYP Entertainment is 1.69 times more volatile than Korea New Network. It trades about 0.0 of its potential returns per unit of risk. Korea New Network is currently generating about -0.03 per unit of risk. If you would invest  7,161,132  in JYP Entertainment on December 28, 2024 and sell it today you would lose (851,132) from holding JYP Entertainment or give up 11.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

JYP Entertainment  vs.  Korea New Network

JYP Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days JYP Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Korea New Network

Risk-Adjusted Performance

Very Weak

Over the last 90 days Korea New Network has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Korea New is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JYP Entertainment and Korea New

The main advantage of trading using opposite JYP Entertainment and Korea New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JYP Entertainment position performs unexpectedly, Korea New can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Korea New will offset losses from the drop in Korea New's long position.

The idea behind JYP Entertainment and Korea New Network pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.